The oil market is keeping an eye out on the Red Sea disruptions, making plans for a week-long interruption in the supply chain, Bloomberg reported.
Shipowners, brokers and traders affiliated with the business stated that routes for the supply of vessels were changed to shun the zone that handles about 12% of global seaborne trade. It merits here to mention that some vessels are arranged up to a month in advance.
Earlier this week, at least six oil tankers avoided the southern Red Sea in the wake of US-led strikes against Houthi targets in Yemen.
A missile struck a US-owned cargo ship off the coast of Yemen, a British security agency and maritime risk company said on January 15, a day after Houthis fired a cruise missile at an American destroyer.
Amidst airstrikes, western navies have already warned vessels to stay away from the danger zone. Several owners decided to shun the risky route after Houthis warned of striking commercial fleets of US and UK.
“More and more owners are avoiding the area,” said Alexander Saverys, the chief executive officer of Euronav NV.
“What looked like something that could be solved within weeks, now could indeed have consequences for many months,” said Saverys whose own fleet can transport over 50 million barrels of oil.
The decision to sail to Asia instead of Europe has resulted in a spike in earning. Moreover, many Iraqi crude shipments have been booked on tankers that will take a thousands-of-miles detour around Africa.
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In a statement, Danish tanker owner Torm said that there’s been an increase in voyages to Asia for transporting refined fuels. That has helped pushed earnings on the so-called relatively large tankers that ship oil products from $35,000 a day to $60,000 a day over the past week.
The market structure of Brent, which is used to price nearly 80 per cent of the world’s traded oil, hit its most bullish in two months on Friday, Al Jazeera reported.
Less Middle Eastern crude headed to Europe, with the volume nearly halved to about 570,000 barrels per day (bpd) in December from 1.07 million bpd in October, Kpler data showed.
